Fixed asset and total asset turnover ratio, Finance Basics

Fixed Asset and Total Asset Turnover Ratio

Fixed asset turnover = Annual Sales / Fixed Assets

This ratio indicate the efficiency along with which, the fixed assets were employed to generate sales revenue like a ratio of 1.4 means one shilling of fixed assets was employed to generate Sh.1.4 of sales.

Total asset turnover = Annual sales /Total assets

The ratio signify amount of sales revenue generated from employment of one shilling of total asset.